Federal law enforcement officials arrested a Florida man Tuesday for allegedly defrauding investors by telling them he had access to shares of Facebook before its initial public offering.

The U.S. Attorney's office in New York said Craig Berkman, 71, received a total of $8 million from investors who thought they were investing in Facebook (FB) prior to the social network's IPO last year.

Berkman also allegedly misled investors about his access to shares of other social media companies before they went public, including LinkedIn (LNKD), Groupon (GRPN) and Zynga (ZNGA), according to the Securities and Exchange Commission.

The SEC charged Berkman with fraud, saying he used the money he raised to make "Ponzi-like payments" to previous investors, pay a bankruptcy settlement and fund his personal expenses.

"Berkman blatantly capitalized on the market fervor preceding highly anticipated IPOs of Facebook and other social media companies to fleece investors whose cash flow he treated like an ATM to fund his own living expenses and pay court-ordered claims to victims of his past misdeeds," said Andrew Calamari, an SEC lawyer in New York.

A one-time gubernatorial candidate in Oregon in the 1990s, Berkman was taken into custody in Odessa, Fla., and is expected to appear in federal court in Tampa on Tuesday. He faces up to 20 years in prison if convicted. Berkman's lawyers at Ransom Blackman LLP in Portland did not immediately respond to a request for comment.

According to court documents, Berkman told investors his private equity fund, Ventures Trust II, controlled shares of Facebook before the company went public last May. But prosecutors say Berkman had only a small, indirect investment in the then privately held company through an affiliated fund. This investment was terminated in early 2012 after the fund that held the pre-IPO shares learned Berkman had forged a letter from its lawyer to exaggerate the size of his Facebook stake.

As more investors began to redeem their shares of Facebook last year, prosecutors say a lawyer for Ventures Trust II sent another letter to investors insisting that the fund "is not a Ponzi scheme."

The SEC has filed civil charges against the lawyer, John Kern of Charleston, S.C., for helping to cover up the alleged scheme.

Prosecutors also accused Berkman of misleading investors in a business he set up called Face Off Acquisitions, which was supposed to control 1 million pre-IPO shares in Facebook through an acquisition. Berkman allegedly raised $2.5 million by telling investors that "a prominent billionaire investor" had committed to Face Off, but in reality the deal was never official.

Facebook was one of the most sought-after investments on Wall Street before its IPO went awry last May. In the months before the IPO, there were stories of early investors in the social network, including the graffiti artist who painted the company's headquarters, who would become instant millionaires.

Prosecutors say Berkman took advantage of the excitement around Facebook's IPO to dupe investors.